From BitPagos to BiM, Latin American innovators are taking advantage of high mobile penetration, a strong middle class and a unified culture to capture new opportunities in the digital economy.

1. Tech in Latin America
LATAM
DIGITAL
NOVEMBER 2016
#

2. SPECIAL THANKS TO:
I-DEV would like to thank Brad Michaels and his company, Social Labs, for collaborating to pull the cutting-edge market insights
in this report. Together, we interviewed over 35 thought leaders, innovators and investors across Latin America’s tech sector:
We’d also like to thank Merche Calleja from the Taller de Arquitectura & Diseño in Puebla, Mexico for designing our cover.
Jackie Hyland
Acción Venture Lab
Facundo Turconi
Afluenta
Carolina Medina
Agruppa
Guillermo de Vivanco
Angel Ventures Peru
Cesar Z Huedeberte
Asix
Fernando Luege
Bankaool
Sebastian Serrano
BitPagos
Jeffrey Bower
Bower & Partners
Andres Barriga
Cornershop
Liliana Gallego
Creame
Amparo Nalvarte
Culqi
Augusto Ruiz Tagle
Destácame
Jared Miller
EFL Global
Andres Fontao
Finnovista
Andy Lieberman
GSBI
Francisco Sandoval
i2btech
Maria Laura Cuya
InnovaFunding
Juan Fermín Rodriguez
Kingo
Adalberto Flores
Kueski
Ana Paula Gónzales
New Ventures Mexico
Ciro Luis Echesortu
NXTP Labs
Rafa de la Guia
Omidyar Network
Miguel Arce
Pagos Digitales Peru
Jessica Salazar
Pago Digitales Peru
Paul Proctor
Parity Pay
Martin Schrimpff
PayU
Andrés Alban
Puntored
Armando Jara
Redelcom
Enrique A Hablutzel
Seedstars World
Pascal Finette
Singularity University
Horacio Melo
Start-Up Chile
Julie McPherson
Tiaxa
Alexander Gomez
Telefónica – Wayra
Dan Cohen
Tienda Pago
Maria E Miranda
Visanet
Analia Ferrero
Visanet

3. ABOUT THIS REPORT
With twice the US population at 641
million people and nearly 70% mobile
penetration, Latin America poses a large
and attractive business opportunity for
digital tech innovators. While it may not
get the attention of East Africa’s ‘Silicon
Savannah’andtheUS’sstart-upinnovation
scene, growing per-capita wealth, high
mobile penetration and a large number
of un- and under-banked people and
businesses make Latin America one of
the highest potential digital economies in
the world. In this report, we highlight key
trends to watch out for and opportunities
to further unlock growth in this market–
particularly in ways that people make
payments, do business and access capital.
While Brazil tends to attract the majority
of the buzz, boasting 209 million people
and tech innovations that have attracted a
range of investors seeking to tap this large
market, we have chosen to focus our
analysis on the burgeoning opportunity
for the rest of the region – with leading
countries Mexico, Colombia, Peru, Chile
and Argentina representing a market of
432 million people primed for a digital
revolution.
From BitPagos to BiM, Latin American innovators are taking
advantage of high mobile penetration, a strong middle class and a
unified culture to capture new opportunities in the digital economy.
SECTION 1
What’s Driving Digital?
Page 4
SECTION 2
Setting the Pace:
Top Trends to Watch
Page 8
SECTION 3
Barriers & Challenges
Page 33
3

4. GROWING WEALTH &
MIDDLE CLASS
In the past decade, the number of people
in Latin America’s middle class grew
by 50%, incorporating 50 million new
consumers. During this time, Gross
National Income (GNI) per capita
has grown at 11-12% per annum –
approximately the same rate as in Sub-
Saharan Africa, but with an average
income 5.5x higher at ~$9,000.1
Greater
income affords greater disposable income
to spend on products and services,
more frequent transaction needs, and a
willingness to pay for financial services
such as loans or wealth management.
RAPID URBANIZATION
Latin America and the Caribbean have
the largest urbanized population in
the world, with 80% of people living
in cities; this compares to only 45% in
Asia and 37% in Sub-Saharan Africa.2
Rapid urbanization in the region is
driven by jobs – and with jobs come
steady incomes and rich, concentrated
markets for new products and services
as well as client acquisition. Yet, with the
population relocating to big cities, the
sense of local community and human
connectivity is eroded – driving people
toward digital and social media solutions
to stay informed and connected.
1. Economic Mobility & the Rise of the Middle Class, World Bank, 2013
2. World Bank data, 2015
Latin America vs. the World:
Drivers of the Digital Economy
Urbanization GNI per capita
What’s Driving Digital?
SECTION 1
LATIN
AMERICA
80%
8.9k
SUB-SAHARAN
AFRICA
38%
1.7k
ASIA
45%
5.6k
4
Mobile user pentration
67%
40%
63%
Sources: World Bank & eMarketer data, 2015–2016

5. CHEAPER TECHNOLOGY &
HIGH CONNECTIVITY
Growing wealth combined with more
affordable technology has led to an
explosioninconnectivityinLatinAmerica,
with rapid adoption of smartphones and
the Internet in the last 5 years. Sixty-eight
percent of Latin Americans have mobile
phone subscriptions, the highest after
Europe and North America, and about
45% of subscribers use smartphones.1
One third of Latin Americans currently
access the internet via their mobile
phones, and it is expected that by the
end of 2016, more than 60% of the
population will be online, connecting
from an array of devices including first
and foremost smartphones, followed by
PCs and tablets.2
Now, with a basic phone for $20 and
a smartphone under $100, mobile
penetration is soaring, making online
presence and mobile-enabled services
a growing imperative for businesses
to remain competitive, boost product
sales, engage consumers and improve
operational efficiency. While these are
indicators of the regional potential, there
is a lot of room for growth – under 60%
of the population connects to internet
at least once a month despite regional
mobile internet coverage of 90%.3
STRONG COMMON REGIONAL
PRIDE, LANGUAGE & CULTURE
While Latin America has diverse
policies and regulations that many will
argue makes cross-border expansion
challenging, Latin America is unified
on a different, cultural level – and by
a common language, if we exclude
Brazil! Go to Colombia, Mexico, or
Chile, and many will recognize the same
Latin singers, authors and celebrities.
Even telecom companies and banks
can be found across the region, having
established a foothold long ago. Leading
telcos Movistar and Claro can be found
in almost every Latin American country,
while BBVA, Santander and Citibank
have similar reach.
LARGE UNBANKED & UNDER-
BANKED POPULATIONS
Despite high mobile penetration, the
full potential for a thriving e- and
m-commerce ecosystem is constrained
1. IDC FutureScape: Latin America IT Industry 2016 Predictions
2. GSMA Mobile Economy Report, 2015
3. GSMA Intelligence, 2016
Despite high mobile and internet penetration in Latin America,
the majority of the population remains unbanked
29.6M
22.1M
74.6M
6.7M
65.4M
0% 50%
UNBANKED POPULATION
PERU
MEXICO
CHILE
COLOMBIA
BRAZIL
KENYA
5
400MMobile phone users
182MSmartphone users
350MInternet users
TODAY...
320M
Total Users
Sources: eMarketer data, 2014–2016; World Bank Global Findex
Database, 2014

6. by a large unbanked population that
relies only on cash payments. Forty-
nine percent of Latin American adults
are without a bank account, and up to
70% are considered “underbanked” –
without access to products like loans
or credit cards. Brazil and Chile lead in
banked populations with 68% and 63%
with formal accounts, while others like
Colombia, Mexico and Peru lag behind
at 39%, 39% and 29%, respectively.1
While Latin America has higher per
capita bank branches and ATMs than
other regions, banks are not reaching the
greater population, opening a lucrative
gap in the market for innovators.
Extra wealth and owning a phone are just
a few factors that create the foundation of
a strong future digital economy. Critical
to its growth are three collaborators
who, when linked effectively, foster
the development of impactful, highly
scalable solutions: (1) technology
innovators, (2) early adopters, and (3)
ecosystem enablers.
In this report, we explore these three
actors, regional successes and the range
of opportunities we see ahead to unlock
full market potential.
6
2
Governments, companies
and investors who pave the
way for digital disruption
by breaking down barriers
in policy, funding and
infrastructure needs
Developers of new products/services to
better address consumer and business
needs, such as operations, purchasing
experience or access to capital
KEY PLAYERS DRIVING THE DIGITAL ECONOMY
ECOSYSTEM
ENABLERS
TECHNOLOGY
INNOVATORS
1
DIGITAL
ECONOMY
Consumers and companies who
anticipate the future and who will take
the risk to realize the potential future
benefits of first mover innovation
EARLY
ADOPTERS
2
3
1. World Bank Global Findex Database, 2014

7. – Jason Spindler, Managing Director at I-DEV International
Photo: Courtesy of Bower & Partners
From TV, music, and books, to companies like
Bimbo, Movistar and major banks – LatAm not
only shares a common language, but also has
a long history of sharing across borders from
Puerto Rico to Peru. This makes it a very scalable
marketplace twice the size of the US. What
happens in Colombia or Mexico doesn’t stay in
Colombia or Mexico......”

8. Mobile solutions are streamlining
logistics & delivery
Page 21
4
Setting the Pace: Top Trends To Watch
SECTION 2
Mobile solutions are streamlining
logistics & delivery
Page 21
4
Latin American innovation hubs
are on the rise
Page 26
5
Investors chase the “El Dorados”
of e-commerce & fintech
Page 29
6
8
New players are driving mobile
money & digital payment adoption
Page 9
1
Alternative banking & loans
services are filling the gap
Page 14
2
B2C players bet on booming digital
commerce
Page 16
3

9. Traditional banks have failed to capture the masses,
opening a broad opportunity for digital innovators
New players are driving mobile
money & digital payment adoption
1
Cashless payments are a critical building
block to e- and m-commerce but are
often taken for granted, especially in a
cash-focused culture. In Latin America,
only 40% of consumers have debit
cards and 20% credit cards, compared
to double this in high-income OECD
countries. Less than 4% have a mobile
bank account, and only 50% have any
kind of bank account.1
With low banking
rates and low trust in banks, there is a
gap in the market for new entrants who
offer seamless and trustworthy alternative
solutions.
EASING THE UNBANKED TOWARD
E- & M-COMMERCE
In a region with low trust and high
cash dependency, hybrid solutions
are being developed to ease skeptical
consumers toward alternative and online
payment options. For example, PayU
(international) and Puntored (Colombia),
2 online payment processors, have
partnered with convenience store chains
like Oxxo in Brazil and Mexico to allow
customers to pay for online purchases
via cash in their local store. For low to
middle income consumers who are used
to paying for expensive products, such as
appliances and electronics, in ‘cuotas’ or
installments, online payment processors
can offer lay-away or installment
options to adapt to this custom. Kingo
in Guatemala, for example, allows
consumers to pre-pay for solar energy
by the hour, day, week or month at their
local kiosk, where shop owners are
connected to the mobile platform.
Mobile money is also a critical and high
potential opportunity to attract the large
unbanked population. M-PESA in Kenya
remains the strongest success story of
the potential for mobile to change a
developing economy, allowing customers
Low acceptance of traditional
banking has opened a significant
market for m- & e-solutions
9
1.World Bank Global Findex Database, 2014
20%
Credit cards
Bank account
50%
40%
Debit cards
% OF THE POPULATION
Source:World Bank Global Findex Database, 2014

10. to send and receive money from anyone
with a mobile phone and an M-PESA
account. More trusted and secure than
cash, it has also driven financial inclusion
in areas unreached by banks in Kenya,
and has prompted countries with high
unbanked populations all around the
world to attempt to replicate this system.
M-PESA was launched and promoted by
incumbent telco Safaricom and has been
a critical driver of Kenyans’ adoption
of mobile money, with 90% of the
population using M-PESA on a regular
basis1
compared to fewer than 4% of
Latin Americans using any mobile money
platform. With a similar traditional bank
account penetration to Kenya prior to
M-PESA (50%), Latin America is ripe for
a new entrant, such as a mobile money
player, to capture this opportunity.2
Mobile money players have popped up
in Latin America already, for example:
Tigo in Central America, Bolivia, and
Uruguay; recently launched BiM in
Peru; and Telefónica partnerships with
banks in Brazil. Yet, these initiatives
have far to go to achieve critical mass
or similar success. The backing of strong
incumbents who leverage existing
infrastructure, combined with more user-
friendly, diversified solutions that have
day-to-day practicality, can incentivize a
dramatic shift.
ENTRANTS OFFERING INTEGRATED
& MORE AFFORDABLE PAYMENTS
While innovators have struggled to scale
and navigate fragmented Latin American
markets, success cases like PayU,AllPago,
BrasPag and MercadoPago are among the
online and mobile payment processors
that have achieved scale in penetrating
multiple Latin American markets.
In addition to carving out a share of the
market, these players are also pushing
incumbent banks and credit card
processors to explore better solutions to
stay relevant and attract an increasingly
tech-savvy, still bank-averse population.
Some businesses have done this through
partnerships, while others have avoided
traditional banking altogether.
These rising stars are shifting the market
by offering a better user experience,
better pricing, and seamless integration.
Key innovators can secure their
relevance and growth by offering
1. Communications Authority of Kenya
2. World Bank Global Findex Database, 2014
Mobile money is a challenging product.
You need a value proposition significant enough
that the incentives to participate reach a point
where it becomes more difficult to be
out of the system than in.”
– Jeffrey Bower, Managing Partner at Bower & Partners
10

11. MOBILE MONEY LEADERS REACHING SCALE
BRAZIL, MEXICO, COLOMBIA, ARGENTINA
A white label payment service provider (PSP) for
global merchants and other local PSPs, Allpago
offers a single integrated payment platform
that promises to boost revenues by 80% and
offers the best conversion rates, state-of-the-art
technology, and regulatory advice necessary to
be successful in e-commerce in Latin America.
11
BRAZIL
BrasPag allows Brazilian e-commerce
businesses to process payments from 23
different international credit card brands, as
well as accept debt transactions from 32 banks
in 10 countries. In 2013, BrasPag processed
over 1.1 million transactions from Mexico
alone.
MEXICO, COLOMBIA, PERU, etc.
PayU’s back-ended payment platform offers
lower transaction fees to lure early adopters,
such as local business owners, who want to
accept credit card and alternative payments
without the burdens of traditionally high
commissions – up to 5%. PayU allows Latin
American consumers to purchase from 20,000
local vendors.
MEXICO
Conekta’s e-commerce plugin allows small
businesses to easily accept payments with
credit and debit cards, cash, bank transfers and
monthly installments. Recent Series A funding
will also allow partner businesses to accept
payments from over 14,000 Oxxo convenience
stores across Mexico.

12. superior technology and user experience
while also cutting transaction fees by
0.75% or more from banks and credit
card processors – to access the greater
purchasing options.
TRADITIONAL PLAYERS PUSHED TO
MAINTAIN RELEVANCE
Showing additional promise, new digital
payment processors have begun to
push banks and credit card processors
to re-think their high fees and outdated
infrastructure. Meanwhile, existing
service providers are pushing into the
region, offering additional perks to
attract new partners. For example, Visa
Checkout is now in 6 Latin American
countries – Argentina, Brazil, Chile,
Colombia, Peru, and Mexico – offering a
streamlined online payment process for
consumers purchasing via smartphones
or the internet; to increase adoption and
incentivize sign up from small business
partners, Visa Checkout offers a suite
of additional support, such as website
design and accounts management.
Peru’s Culqi facilitates transactions for
both merchant and customer, offering a
platform the creates PoS payment codes
and connects to stored card details
to reduce the cost of processing and
aggregate different payment providers
on one platform. Because 80% of online
transactions get canceled at check-out,
Culqi also focuses on providing an easy-
to-use interface that helps streamline the
successful completion of transactions.
This trend will continue, particularly as
national policies improve and clarify
treatment of digital payments and
fintech policies. Furthermore, pressure
to catch up with other regions in
technology integration, innovation, and
entrepreneurship will begin to reach
even the most traditional big incumbents.
For example, in Chile, alternative
payments are restricted and dominated
by a single player; only one company,
Transbank, is authorized to process credit
cards and internet payments, making
innovation and digital alternatives highly
unattractive – as well as inhibiting local
commerce and entrepreneurship. This
policy is anticipated to change soon,
as government recognizes the impact
on competitiveness and the exodus of
local start-ups to more digital-friendly
neighboring markets.
12
MOBILE MONEY ECOSYSTEM:
POLICY ENABLERS
Latin America is making positive shifts toward
policies that facilitate mobile money adoption,
new entrants and investment.
COMPETITIVE MARKET FOR MOBILE MONEY
Third parties/non-banks allowed to offer
mobile or e-wallet products alongside banks
a
Bolivia Brazil Peru
LEADERS
Under $1M minimum for lenders to attract
new entrants
a
Bolivia Brazil Peru
LEADERS
LOWER MINIMUM CAPITAL REQUIREMENTS
EASY-TO-NAVIGATE KYC REQUIREMENTS
Lower red tape and transparent registration
processes
Lower red tape and transparent registration
processes for know-your-client (KYC)
a
Colombia Mexico Peru
LEADERS
Guatemala Paraguay
NATIONAL POLICY & GOVERNMENT SUPPORT
Lower red tape and transparent registration
processes
Financial inclusion policy to guide other
initiatives, country-wide mobile money
adoption targets, government salary paid via
mobile money, & incentives for non-cash use
a
Brazil Colombia Peru
LEADERS
Chile Mexico

13. Photo: Courtesy of Uber
– Andres Fontao, Managing Partner & Co-Founder at Finnovista
If you go to Colombia today, you will see that
most taxi drivers use technology and manage
their activity like a real business. Two years ago,
taxi services were entirely cash-based, with a risk
not only for the drivers but also for the cash in
their pocket.”

14. Alternative credit scoring and loan
providers are popping up in Latin
America to fill a gap left wide open for
the 50% of the population with no formal
accounts, and 30% of SMEs that struggle
to access affordable – or any – capital.1
Meanwhile, a healthy and growing
middle class is increasingly demanding
more sophisticated wealth management
services that they can access through their
phones and broadband. Parties who offer
solutions to businesses and individuals,
with diversified functions and strategic
partnerships, show the greatest promise
and have begun to attract investors’
interest.
THE RISE OF ALTERNATIVE CREDIT
SCORING & DIRECT LENDING
Toaddressthelarge$250billionfinancing
gap for Latin American SMEs that cannot
access affordable capital,1
players like
Tienda Pago and InnovaFunding in Peru
are using purchasing history and sales
records to assess small business credit
worthiness and extend loans. Tienda Pago
gives SMEs the ability to build up a credit
profile and receive 1-2 week advances on
buyer payments, while InnovaFunding
offers automated “factoring” services,
where accounts receivables are used
as loan collateral for small businesses.
Meanwhile, players like Afluenta and
Konfío offer solutions for individuals
as well, and have modeled themselves
off of the UK’s Zopa and US’s Lending
Club to establish peer-to-peer (P2P) loan
marketplaces linked to credit scores that
are based on an assessment of public
records, Facebook activity, bill payments
and phone top-up activities. While these
new products are unlocking capital for
previously unreachable clients, they
are also opening up a broader lending
pool and offer the growing high-income
population – and potential lenders – an
opportunity to invest in exciting, higher-
yield investment opportunities.
Alternative banking & loans
services are filling the gap
Tech start-ups are leveraging an aversion
to traditional banks and growing consumer
demand to capture marketshare
2
14
Utility bill payments
Geography &
demographics
Facebook &
digital reputation
Payment size &
history
Phone top ups
Behavioral (e.g.
typing speed)
BIG DATA
TO UNLOCK CREDIT
WORTHINESS
1. World Bank & IFC Enterprise Surveys, 2013

15. More data collection facilitated by
high broadband, mobile and social
media penetration has led to improving
data analytics that facilitate customer
acquisition and development of services
that take advantage of Latin American’s
aversion to bank visits. Start-ups like
Chile’s Destácame allows customers to
opt-in for a free credit evaluation based
on the payment size and timeliness of
their utilities bills. Loan providers can
access these customers through online
promotions, while consumers are
empowered to share their data with loan
providers to access credit. Meanwhile,
the utilities are more informed on
consumer behavior and can leverage
this to cater marketing and sales – part of
Destácame’s revenue comes from banks
and utilities paying to advertise to their
customer base (if the consumer consents).
Kueski, in Mexico, is another alternative
microlender to individuals and small
businesses that assesses creditworthiness
through demographics data, digital
reputation, behavioral analytics tests
such as typing speed and geography.
ONLINE ONLY OPTIONS BETTING
AGAINST AGING INFRASTRUCTURE
& LOCAL CURRENCY
Meanwhile, banks such as Bankaool
in Mexico and NuBank in Brazil have
bypassed traditional banking and
infrastructure altogether to offer online-
only services, which allow for reduced
fees from lower overhead. Other
innovators, like BitPagos, are building
online-only transaction platforms based
on blockchain technology to offer
cheaper and more secure transactions,
while protecting consumers from
currency shocks – a concern for high-
inflation countries like Venezuela and
Argentina. Businesses in the tourism
industry were early adopters of these
types of payments due to their high
exposure to foreign currency risk and
tech-savvy foreign consumers.
15
FIRST MOVERS IN ALTERNATIVE CREDIT SCORING & SERVICES
ARGENTINA, CHILE, BRAZIL, ECUADOR
Based on bitcoin technology, BitPagos’
digital wallet Ripio allows anyone to
buy and sell bitcoin in local currency,
hold savings, or request a credit line
to finance payments in installments.
Similarly, the BitPagos’ online
payments system BitBookings facilitates
international payments for tourism.
ARGENTINA, MEXICO, COLOMBIA, PERU
An Argentina-based P2P financial
network for consumer loans, Afluenta
offers rates 5-10% lower than traditional
channels, as well as real time credit
assessments and risk scoring, transfers,
loan servicing, collections and a
secondary market where investors can
buy and sell from each other.
PERU, VENEZUELA, MEXICO
Tienda Pago helps SMEs secure short-
term working capital for inventory
purchases. It works with large
distributors, e.g. Gloria, Nestle and
SABMiller, to partner with local shops
and offer inventory purchase advances.
Shops must then repay ‘loans’ upon
sales turnover via mobile payment.
PEER-TO-PEER LOANS FOR SMEs BRANCHLESS BANKS

16. B2C players bet on digital
commerce
Big to small retailers are upgrading their
online offerings in preparation for a digital
commerce boom
3
While Latin American businesses are just
beginning to build strong online brands,
consumers have long been primed to
embrace these upgrades – after all, with
just under 10% of the world’s population,
Latin America represents 20% of global
Facebook users, and nothing is fact if
it’s not on your Facebook profile. Over
120 million people in Latin America
communicate through Whatsapp – with
Brazil and Mexico representing over 70
million users.1
Beyond just social media,
Latin Americans are also integrating tech
to facilitate their daily lives. The region
already represents Uber’s fastest growing
market in the world. Now with more
than 45% of the population with internet
access, consumers are ready for a better
experience that offers greater purchasing
options, diverse payment methods,
expanded logistics and speedier delivery.
Early adopters of e- and m-commerce
were travel companies, such as Despegar,
Aeroméxico, Interjet and LATAMAirlines,
all of whom have registered significant
boost in online sales and bookings via
web and mobile app. Meanwhile the
hospitality sector is embracing Facebook
and Instagram as channels that offer
consumer insights into preferences and
behaviors, as well as build brand loyalty.
THE BEST PRODUCTS & PRICES
GO ONLINE
With the entrance and growing
investment of online retail marketplaces,
including global leaders like Amazon,
Alibaba, Wal-Mart and Best Buy, so
too are regional leaders developing
with similar copycat models to cater
to consumer demand for more options
and a better, streamlined purchasing
experience. Linio, a Rocket Internet-
funded marketplace can be found
across 8 countries, and boasts over 300
million online and mobile users, and
4.5 million app downloads. This leading
Latin American marketplace connects
consumers to over 50,000 vendors, from
as far as Asia, allowing them to make
seamless purchases in any currency via
a partnership with Payoneer. Payoneer, a
US-based payment platform reduces the
burden of expensive international wires,
and has likely been a critical driver of
Linio’s revenue growth and mobiles
sales increase – now over 37% of sales
are done via mobile. MercadoLibre,
16
Of the population will be
connected to the internet
by 2020
60%
Of organizations connect
to consumers via email
and instant messenger
80%
Expected growth of 4G
connections between
2014 and 2015
396%
1. Statista data, 2016
Mass connectivity is enabling Latin American businesses
to reach new audiences
Source: GSMA Intelligence, 2016

17. the regional market leader, is a similar
Argentina-based online marketplace
drawing consumers in 15 countries to
digital commerce for a better purchasing
experience, and integrating MercadoPago
for easy payment processing.
Meanwhile, a few innovators are further
enhancing customer experience, making
it more exciting to shop via mobile.
For example, Impresee in Chile allows
consumers to upload a sketch or photo
of a clothing or furniture item they
liked at a friend’s house, then through
image recognition software, select from
identified purchasing options. This
technology has broader potential beyond
shopping to other parts of the value chain,
such as verifying product authenticity
and tracing supply chains through
special images. Another example, Tiaxa
partners with mobile network operators
in 20 countries – e.g. Mexico, Peru,
Chile, Argentina, Brazil, Colombia,
and Ecuador – to offer nano-credits for
prepaid mobile airtime or mobile money
payments for account holders, regardless
of their bank affiliation. By providing
additional infrastructure, revenue
enhancement services and data insights
on consumer behavior, partner telcos
can do more with and offer more to their
customers. Big data and companies like
Tiaxa that integrate with retailers, telcos
and incumbents are beginning to unlock
incredible market potential, leading to
more informed and targeted marketing
campaigns via phone and internet.
Getting the brand presence right, offering
compelling and trustworthy online
services, and creating a user-friendly,
omnichannel customer experience are
the critical next steps that will capture
the masses. Apps like Facebook and
Whatsapp – with their integration of
payments and additional services,
perhaps someday to compete with the
range of services integrated into WeChat
in China – will increasingly draw
consumers further from brick-and-mortar
toward mobile use. New models that
address Latin Americans’ preference to
pay on delivery and in cash for purchases,
17
[Just like] Google democratized access to information...
we have democratized access to commerce. In Latin
America, previously if you didn’t live in a big or capital
city, you didn’t have access to products... Today you
can buy the best products at the best prices,
no matter where you live.
– Marcos Galperín, CEO of MercadoLibre1
1. Interview with Enperspectiva.net

18. 18
INNOVATORS IN B2C TECH FOR E- & M-COMMERCE
ARGENTINA
MercadoLibre is Latin America’s
leading online marketplace dedicated
to e-commerce and online auctions.
After 16 years of expansion in the
region into 15 countries, today its
model is similar to ebay, a strategic
partner and largest common stock
holder.
MEXICO
Linio is a newer online marketplace
entrant posing competition for
Mercado Libre with a presence in 8
countries and 3+ million products
that can be purchased online or
via the mobile app. The platform
offers automated product uploads,
preferential shipping rates, borderless
payments via Payoneer and local
customer service/operations teams.
MEXICO
Pig.gi offers a customized
m-commerce experience by
showing targeted ads on the phone
locked screen. By viewing ads,
users earn Pig.gi coins that can
be redeemed for airtime or other
prizes. Launched in Mexico, Pig.gi
expands to Colombia this month.
CHILE
Impresee uses image
recognition technology to help
consumers find and purchase
items online by uploading an
image and accessing a catalogue
of similar products.

19. and bypass costly and monopolistic
online payments platforms that charge
up to 5% commission on credit card
transactions, will win the greater e- and
m-commerce retail market. With only
5% of online retailers in Latin America
with a mobile-enabled website, there is
much opportunity for further growth!
PAYG OPENS A BROADER
CONSUMER BASE
New and improved mobile solutions
are also gradually opening up a larger
consumer market that has been hard to
reach and develop affordable solutions
for the large unbanked and last mile lower
and middle income segments. Improving
consumer data analytics to assess new
alternative credit rating and offer loans to
the unbanked, combined with the entry
of pay-as-you-go (PAYG) technology,
make the low income segment finally
reachable and increasingly attractive.
Early entrants Kingo and PowerMundo
have also begun to pilot and scale PAYG
solar technology, providing connection
to the grid for rural and low-income
populations at a more affordable price
and reducing cash handling costs. While
this is very much a nascent trend in
Latin America, we can look at strong
examples of what the future could hold
if we consider companies in East Africa
– such as M-Kopa, Off-Grid Electric and
Angaza – that have rolled out effective
PAYG mobile money payment platforms
to offer solar lighting, clean cookstoves
and other home goods. These models
allow consumers to make daily, weekly
or monthly installment payments for
their products or services, and have the
additional benefit of reducing risk of theft
from field staff or field cash transfers.
18
FIRST MOVERS IN PAY-AS-YOU-GO TO THE LAST MILE
19
GUATEMALA
Kingo provides prepaid solar energy
to off-grid homes via a cloud-based
mobile platform that works with or
without internet. Consumers top up
credit at local kiosks, similar to buying
mobile airtime, while Kingo maintains
ownership of the hardware and manages
maintenance via the mobile platform.
PERU
Powermundo is the first and
only solar lamp distributor piloting
Pay-As-You-Go in Peru. Local
distributors collect cash payments
then transfer via mobile money with
BIM. BBox and SunKing lighting units
promptly shut off if payments are not
received.
FIRST MOVERS IN PAY-AS-YO-GO (PAYG) TO THE LAST MILE

20. Not everything is based on innovation in
hardware technology; a lot of making a product
scalable is being able to catalyze it through a
distribution channel that meets market needs.”
– Juan Fermin Rodriguez, Founder of Kingo
Photo: Courtesy of Kingo

21. Distribution remains a big challenge in
LatinAmerica and is another barrier to the
success of online businesses due to poor
infrastructure and a lack of transparency
and trust in delivery systems. Latin
America lags behind leading exporters
on almost all measures of logistics quality
– in particular, infrastructure, timeliness
and traceability. Shortening supply
chains, better connecting suppliers
and buyers, and increasing financing
options are just some of the benefits that
technology is unlocking across sectors
from agriculture and transportation.
CONNECTING SMALL PRODUCERS
& SELLERS TO BOOST PROFITS
Across Latin America, B2B companies
that bypass middlemen and strengthen
ties between smallholder producers
and markets are emerging to cut costs
and improve transparency. Agruppa
(Colombia) aggregates fresh produce
orders via text message from mom-and-
pop shops in Bogotá to unlock access to
wholesale prices, by purchasing product
in bulk from farmers. Mobile app Rutear
(Argentina) allows smaller vendors
to transport goods at a lower cost by
purchasing unused space in trucks
traveling through their area. Recent start-
up Grou (Colombia) also focuses on
connecting rural smallholder farmers to
bigger, more lucrative sales markets and
links them with truckers to take advantage
of lower-cost unused truck space.
With an increasing integration of
smallholders in supply chains, we
anticipate further services such as mobile
payments platforms to rise to reach this
market segment. The Asix Center for
Digital Innovation in Peru is already
working with companies to develop
advanced mobile solutions. For example,
they have partnered with Agrobanco, a
leading microfinance bank, to develop
a mobile app that allows farmers to
establish and manage accounts without
visiting a bank branch. This reduces costs
to banks of reaching these distant clients,
while opening the opportunity for other
vendors to piggyback on this trend
and offer PAYG products that can be
purchased through the same platforms
where they receive payments.
FASTER, SAFER DELIVERY
& LOGISTICS
A long time issue in Latin America has
been transparent, streamlined logistics
Tech platforms are solving logistics challenges
to better connect supply & demand and allow
businesses to reach the last mile
4
21
Tech solutions are helping Latin American
businesses to get ahead in the following ways
Improved Security
Lower Transport Costs
Access to the Last Mile
Faster Delivery
Access to Capital
AUTOMATION
GEO-
OPTIMIZATION
DIGITAL
PAYMENTS
Mobile solutions are streamlining
logistics & delivery
DIGITAL
INVOICING

22. 4
3
2
1
LATINAMERICA
EUROPE
SOUTHEASTASIA
USA
SUB-SAHARAN
AFRICA
The next cycle of economic growth in Latin
America will come from digital transformation.
Companies are beginning to tackle organizational
challenges – especially in manufacturing, retail
and financial services – where digitization can
make the biggest productivity gains.”
– Camille Chouan, Senior Associate at I-DEV International
that reduces losses and risk of fraud.
Logistics company Frogtek (Mexico) has
developed an affordable platform for
retailers to address these issues, via a
barcode scanner and tablet device that
can be used to track inventory, accept
credit card payments and complete
all aspects of a transaction. Similarly,
Datil (Ecuador) helps small businesses
grow through automation of operations,
providing cloud-based tools to send
digital invoices and create sales registries.
This combination and increasing blend
of integrated tech-based platforms could
push Latin America far past competition
offered by the often cheaper, yet lower
ranked regions of Southeast Asia and
Sub-Saharan Africa for reliability, quality
control and timely service.
Tienda Pago in Venezuela and Peru is
another company offering lower supply
chaincostsblendedwithaccesstocreditto
drive business mobile payment adoption.
It helps users plan transport routes and
track payments transparently, saving time
and reducing the required transport fleet.
In the process, the company offers mobile
payment incentives to SMEs by providing
access to credit once they have built a
credit score. An unexploited extension
of such mutually beneficial models is
linking m-money to the end consumer,
and paying wages via the same platform
in order to reduce broader business costs
and attract mobile wallet shoppers.
To address a growing demand for
improved customer experience, B2C
players are stepping up their logistics
game. Cornershop (Chile) replicates
Instacart in the US, offering online
ordering and rapid home delivery of
groceries – though acceptance of credit
card payments continues to be a tricky
barrier complicating rapid adoption in
the country. Meanwhile, MercadoLibre,
Linio, and other e- and m-commerce
platforms are beefing up their back-ended
distribution and logistics coordination to
increase consumer trust and ensure rapid
delivery. For example, Linio advertises
shipping within 48 hours of purchase
to compete with big global players like
Amazon. Meanwhile, Seedstars winner
Urbaner (Peru) offers a logistics platform
with an algorithm that optimizes transport
routes for faster and safer delivery of
packages, while Beetrack (Chile) offers
businesses a system to better manage
their delivery service and customer
satisfaction.
22

23. 23
SOURCING INVENTORY & SALES
TRANSPORT DELIVERY
PERU
Rutear reduces transportation
costs for small vendors by
facilitating transport of goods via
unused truck space. Vendors can
post their shipments, then receive
bids from 1000s of truckers.
MEXICO
Frogtek offers an affordable
platform for retailers to improve
operations, via a barcode scanner
and tablet device that can be used
to track inventory, accept credit
card payments and complete all
aspects of the transaction.
PERU
Urbaner (Winner of Start Up
Perú and Seedstars World) is
an e-commerce API that allows
local department stores or other
businesses to offer easy delivery for
customers by managing, tracking
and securely shipping orders.
LEADERS IN SUPPLY CHAIN LOGISTICS
COLOMBIA
Agruppa reduces time
and transportation costs for
small vendors in low income
neighborhoods of Bogota, by taking
daily orders via mobile phone then
aggregating purchase of vegetables
and fruits directly from farmers and
handling direct delivery to shops.

24. Latin America has not built itself
up as a recognized innovation or
entrepreneurship center historically.
Yet, increasingly, as governments and
incumbents recognize the need for
diversified economies and job creation,
they are turning to entrepreneurship and
start-ups. Governments have been key
drivers of an emergent entrepreneurial
ecosystem, while incumbents are
warming to the benefits of partnering
with lean, innovative start-ups to achieve
regional scale and ongoing relevance.
GOVERNMENTS LEADING WITH
INVESTMENT & ENTREPRENEURSHIP
In most of Latin America, government
continues to make or break the successful
development of a digital commerce
ecosystem. A few country governments
– especially in Chile, Mexico, Argentina,
Colombia – have been active in
stimulating entrepreneurship and
innovation hubs by creating policies
that support start-up launch and growth.
Nineteen percent of accelerators in Latin
America are exclusively government
funded, compared with 14% in Europe
and <10% in the US/Canada, and 23%
of Latin America accelerators receive
mixed public-private funding.1
In
Santiago, the government-backed Start-
Up Chile incubator program provides
no-strings-attached seed funding and
acceleration each year to a cohort of
selected local and foreign entrepreneurs
alike, investing ~$7M USD in 2015. The
model has been replicated around Latin
America’s dynamic tech hubs with the
launch of Start Up Perú, Start-up México
and Colombia Startup competitions in
recent years. In Latin American “Silicon
Valleys” like Buenos Aires, São Paolo,
Bogotá and Mexico City, the existence
of a strong urban infrastructure, leading
universities, and high quality of life has
attracted significant foreign investment
from private VC funds and catalyzed
talent to support start-up movements.
Finally, there is Peru, where the
national government has mandated
that all universities develop an internal
incubator – a requirement designed to
set the country on the map for leadership
in entrepreneurship. And now, for the
first time, Peru has the chance to rise as a
tech innovation leader with the roll out of
its government and private sector-backed
BiM mobile money system – the first
broad reaching mobile money platform
in the region.
Latin American innovation
hubs are on the rise
Public and private leaders are priming the
region for digital innovation
5
1. Gust Accelerators Report, 2015
24
Grupo Bimbo, Blue Label and Visa have enabled small
retailers across Mexico to accept credit card payments for
goods and services using the Red Qiubo platform
700,000
Small Retailers
Prepaid Airtime
Goods & Inventory
Mobile Platform

25. Governments of Peru and Medellín
(Colombia) have made conscious and
significant efforts to invest in stimulating
entrepreneurship, yet it’s important to
note that government efforts alone are
rarely enough! In Peru, even though
all universities must have an incubator,
incubation services that result in
scalable, attractive investments – or even
corporate partners – continue to be a
milestone to aspire toward. In Medellín,
local government has invested $400M in
income tax into Ruta N, the city’s pivotal
start-up accelerator. Yet, successful exits
have been limited, and it remains unclear
if this is a chicken or egg problem. Are
there enough earlier stage investors
or interesting businesses to create real
investable pipeline? Governments have
been very involved in building the seed
stage investor pipeline, but connecting
angel and later stage investors into this
ecosystem is still a work in progress.
Chile is another market seen as a leader
in tech innovation, yet the country’s tech
start-ups have eagerly looked to launch
and scale in other markets, frustrated by
inhibitingpaymentprocessingregulations
– now being made more competitive
through anti-monopoly regulation. Other
regulations like high barriers to entry for
offering new types of banking products
and limitations and delays in developing
mobile money platforms were designed
to protect consumers, but are also
inhibiting innovation and protecting
incumbent industries from disruption.
Modifications such as allowing new
businesses to offer credit or mobile
money can stimulate innovation beyond
what banks are willing to take on. Only
three Latin American countries – Peru,
Uruguay and Mexico – have joined the
25
GOVERNMENT INITIATIVES LEADING THE WAY
RUTA N is a Medellin-funded in partnership with
UNE telecommunications & EPM utility
Range of programs to encourage innovation in
science & technology
APPS.CO & INNPULSA offer similar funds and
acceleration
COLOMBIA
START UP PERÚ aims to diversify country revenue
Grant funding to 268 innovative tech enterprises and
30 incubators by 2016
All universities required to establish a business
incubator to support small and micro-enterprise
initiatives of students
PERU
INADEM established as a new division of government
prioritizing entrepreneurship
Includes seed capital and ~$600M earmarked for
direct investment in VCs, businesses, collateral
MEXICO
START-UP CHILE offers seed grants to attract 100
top global entrepreneurs each year
Also, larger funding to encourage entrepreneurs to
stay and operate in Chile
CHILE

26. TOP 10 LATAM TECH ACCELERATORS
By Number of Start-ups Accelerated
Start-Up Chile
Wayra
Startup México
Startup Farm
Angel Ventures Mexico
BlueBox Accelerator
NXTP Labs
EmprendeFCh
HubBog
Ideas Factory AR
250
112
84
58
38
32
31
28
28
26
Chile
Latin America
Mexico
Brazil
Mexico
Mexico
Latin America
Chile
Colombia
Argentina
START-UPS
UN-based Better than Cash Alliance,
formally pledging to boost digital
payments in their country.
While acquisitions, common language
and similar cultures can help companies
to scale, regulatory differences across
countries continue to make it costly
to expand and increase the chance
of mistakes such as security or legal
breaches that can lead to bankruptcy.
Governments can ease this challenge by
seeking to collaborate, for example, on
initiatives such as the Pacific Alliance –
a trade bloc between Chile, Colombia,
Mexico, Peru that represents 36% of Latin
America’s GDP. As one entity, this bloc
is equivalent to the 6th largest economy
in the World, and is focused on reducing
trade barriers, creating a common stock
market, and other shared services to ease
trade.
INCUMBENTS & START-UPS
COLLABORATE FOR SCALE
Private partnerships have also arisen
from the desire to reach scale quickly,
and stay on top of global trends. Building
on the success of M-PESA’s mobile
money platform in Kenya and to defend
against one player creating a monopoly,
key major banks and telcos in Peru have
united to develop and launch a shared
mobile money platform called BiM. BiM
is designed to achieve rapid scale through
its interoperability across major brands
and phone networks, yet will allow
partners to compete for customers with
unique add-on products such as loans.
Other players, like Culqi, a PoS credit and
debit payment platform, have partnered
with incumbent Visa and Mastercard
providers via non-poaching agreements
that allow them to explore the benefits of
new start-up services while reducing the
risk of cannibalizing existing business
or losing loyal customers in the near
term. Start-ups are also acting as service
providers to big businesses, providing
banks with credit risk scoring or online
loan platforms while allowing the banks
to continue to take on the risk and reward
of loan provision. EFL Global, Lenddo
and Tiaxa are among them.
Other major incumbents have targeted
small businesses by developing payment
processing initiatives and partnerships.
For example, Grupo Bimbo partnered
with Visa, Banamex and Blue Label to
develop Red Qiubo, an in-store mPoS
system to drive increased credit card
purchases. Banamex also launched its
own iOS-based iAcepta Móvil Banamex
mPoS card readers in 2013. This trend of
partnerships poses great potential to take
mobile money to true scale.
26Source: Fundacity Accelerators Report, 2015

27. The race run by innovators is much faster than
the regulators. [The regulators] run a different
type of race – a boring marathon, very stable,
long-term – while the innovators run the 100 m,
and they want to be under 9.58 seconds. So we
need to talk to each other... to understand the
restrictions in place and create an environment
where innovation is allowed.”
Photo: Courtesy of NXTP Labs
– Eric Prado, Superintendent of Banks, Chile
Source: World Economic Forum, Colombia 2016

28. Investors chase the “El Dorados”
of e-commerce & fintech
Government and impact investors have
been working hard to build a healthy
angel and seed investor landscape in
Latin America in recent years. There is
a lot of money being channeled into the
growing number of tech enterprises in
Latin America, particularly in fintech and
e-commerce, and the local investment
space is maturing. In 2015, $594 million
of VC funding was deployed, almost
ten times the $63M invested in 2010.
Over 80% went into IT businesses, with
fintech, e-commerce and transportation
at the top of the list, jointly clearing $300
million.1
AN ABUNDANCE OF EARLY STAGE
SEED INVESTORS
Seed and Series A investors mostly from
the US or based in leading regional hubs
like Brazil and Mexico are abundant
(over 77 Latin America-based funds
closed over the past 5 years) and eager
to invest in start-up tech companies
that show promise in scale and ability
to surpass common hurdles – attracting
consumers accustomed to cash-only
transactions, facilitating access to
credit for SMEs and individuals, and
competing in a landscape dominated by
large incumbents like banks and global
tech giants. Particularly trending in the
regional investment scene are copycat
businesses in fintech and e-commerce
that are replicating and adapting models
from global leaders like Uber, Airbnb
and Paypal in the local context.
While there are fears of a bubble in both
of these sectors, the latent customer
demand and lack of viable alternatives
make Latin America less susceptible to
this than other continents. Latin America
is often criticized for only producing
copycat models at the expense of
proper innovation; however, mobile
technologies that are addressing core
6Investors are poised and ready to invest, if they can
find the scale and innovation they seek
28
VC INVESTMENT BY COUNTRY, 2011-2015
est.$2.1B
TOTAL LATIN
AMERICA
More than
665 funds
&
MEXICO
MEXICO (12.5%)
ARGENTINA (7.3%)
OTHER (7.2%)
BRAZIL (63.9%)
CHILE (4.1%)
COLOMBIA (3.3%)
PERU (1.6%)
Source: LAVCA Report, 2015
1. LAVCA Report, 2015

29. needs and tailoring offerings to local
taste and market dynamics have been
successful at attracting investors, e.g.
EasyTaxi, the mobile taxi hailing service
based in Brazil, and Mi Media Manzana,
an online dating site in Peru. Sharing
economy businesses like taxis or home
rentals only require a city-level network
to be competitive, meaning local players
have the potential to take on Ubers and
Airbnbs to capture the market.
Aside from government initiatives, funds
like Acción, NXTP Labs, 500 Startups
and Jaguar Ventures are leading the way
in seed stage. Acción, unlike most, has
funds that make both Seed and Series
A round investments (Venture Lab and
Frontier Inclusion Fund). KaszekVentures
and QED Ventures are other Series A
funds eager to invest via a range of $500K
to $3M, predominantly in fintech.
Brazil, Mexico and Argentina are
not surprisingly attracting the most
investment, given the large domestic
market opportunity and more advanced
tech ecosystems already in place.
However, with Brazil’s recession, the
flow of money is shifting instead to
Argentina and – while investors are
waiting on critical government reforms
– even more so to Mexico, which is
the second biggest market and growing
quickly. Interestingly the funds flowing
into tech in Latin America are coming
from a variety of geographies, including
from within the continent. The Pacific
Alliance is also helping proven models in
leading countries to readily gain access
and merge to Colombia, Peru and Chile.
Beyond early stage investors, we are
seeing growth in investments in 3rd
platform IT, mobility and big data plays.
29
RECENT HIGH PROFILE INVESTMENTS IN FINTECH & E-COMMERCE
In 2016, Mexico out-paced Brazil in number of deals for the 1ST
time, mainly in fintech & e-commerce
BRAZIL MEXICO
Online-only bank
$100M+ raised by 7 investors
Amazon-style online marketplace in 4 markets
$230M in 5 rounds
Credit payments platform similar to Square
$8M in 2 rounds
Online lending for micro-businesses
$8M from 6 investors
Mexico’s fastest growing online lender
$15M raised in 4 rounds
Online lending and credit scoring
$14M from 11 investors
Brazil’s leading mobile wallet platform
$24M raised in 4 rounds
Online payments for e-commerce sites
$9M in 5 rounds
P2P lending for businesses and individuals
$11M from 11 investors
Source: Crunchbase, Techcrunch

30. As Big Data becomes the next frontier
of competitive advantage, businesses
in Latin America will inevitably shift
away from traditional advertisement
and payments processing and toward
more digitalized and online models to
pull valuable data on consumers. Bill
payment, grocery buying and social
media clickstream can and will be used
in the future for targeted marketing
and anticipating purchasing behaviors
and needs. While adoption of Big Data
analytics in the region is still tepid,
Latin America’s heavy manufacturing,
commodities and energy industries
will drive growth in sensor-sourced
data while the number of connected
endpoints in the region is forecasted to
triple by 2020,1
suggesting a host of new
data streams that enterprises will have to
embrace.
MERGERS TO ACQUIRE SCALE
On the larger end of the spectrum, big
players in the e-commerce space – Rocket
Internet, Naspers and Sequoia Capital
– are chasing fintech and e-commerce
deals. Most common among these
businesses are mergers with other
companies to gain scale; e.g. EasyTaxi
andTappsi merged to take on Uber across
borders; Naspers acquired Colombia’s
PagosOnline into its global PayU online
payments brand; MercadoLibre acquired
KPL Solutions and Axado (distribution)
and Monits (software) to increase back-
end capabilities.
Across all stages of investment, investors
are still eagerly seeking ‘true’ innovations.
Although existing businesses have been
profitable, investors hope to see more
in the next wave of fintech and mobile
commerce deals. Pipeline development,
incentivized talent, regulation changes
and improved underlying system
infrastructure will all contribute to
moving more businesses toward greater
innovation and investment-ready stages
in the Latin American ecosystem.
30
ACTIVE INVESTORS IN LATIN AMERICA
Angel or seed round raises to launch
early stage companies with <$2M
USA
500 Startups
Acción Venture Lab
Acción Frontier
Inclusion Fund
Endeavor Catalyst
Flybridge Capital
Partners
Qualcomm Ventures
South Ventures
Tiger Global
ARGENTINA
NXTP Labs
BRAZIL
Redpoint e.Ventures
COLOMBIA
Velum Ventures
MEXICO
Angel Ventures
Alta Ventures
Variv Capital
Jaguar Ventures
INCUBATOR/SEED EARLY GROWTH
Earlier stage successful companies,
typically seeking $2M-$10M
USA
Pinnacle Ventures
Tiger Global
QED Investors
Qualcomm Ventures
Ribbit Capital
Sequoia Capital
Valor Capital
BRAZIL
Monashees Capital
ARGENTINA
KaszeK Ventures
MEXICO
LIV Ventures
Mexico Ventures
ALLVP
EXPANSION STAGE
Expansion stage businesses raising
$10M or more
USA
Intel Capital
Napsters
Pinnacle Ventures
Sequoia Capital
GERMANY
Rocket Internet
BRAZIL
Bozano Investimentos
MEXICO
LIV Ventures
Mexico Ventures
1. IDC FutureScape: Latin America IT Industry 2016 Predictions

31. VCs have had a lot of money pumped into them
in the last 10 years, and they’ve been investing;
but exits and Series B investments are still
scarce. In the next few years, the region will see
more liquidity, larger funds and bigger ticket
sizes for high growth businesses as proven
investors start to build a track record.”
– Patrick Watson, Director of Latin America at I-DEV International
Photo: Courtesy of BitPagos

32. Barriers & Challenges
SECTION 3
32
A CULTURE OF CASH
After decades of tumultuous governments
and regional conflict, consumer distrust
is high and cash is king. Despite strong
growth of non-cash payments, over 40%
of Brazil’s payments are still in cash,
rising to around 50% for Mexico and
75% for Colombia and Peru.1
People are wary of digital currency,
fearing that it may be seized or just simply
disappear, and most avoid securing their
savings in banks because of the cost
and inconvenience. Meanwhile, mobile
money adoption in the region is less than
2% (vs. 30% in Sub-Saharan Africa)2
due to lack of scale, making compelling
use cases for digital money transfers
and cash-in/cash-out points to give
users a sense of security. In most cases,
government and business perpetuate
these trends; however, as highlighted in
this report, there is strong evidence that
this is changing! This year, Peru launched
BiM through public-private partnership,
and Mexico launched a national financial
inclusion strategy, joining 30 other
countries, with support from the World
Bank to boost banking and with plans to
digitize government cash transfers and
wages payments.
In order to truly drive mass adoption of
cashless payment options, government
and private sector will need to develop
a strong demand mechanism for transfer.
Beyond government or others paying
wages through these platforms, services
that facilitate energy access, seamless
bill payments, taxi driver payments and
access to credit are just a few of the
tipping points needed.
GETTING TO SCALE
E-commerce and associated investment
thrives on scale – across geographies,
across mobile and internet platforms,
and across payment mechanisms. Low
credit card – or non-cash – adoption
and limited trust in online or mobile
options threaten the digital commerce
ecosystem. Realistically, few mobile
payment systems have succeeded in
reaching national or regional scale in
Latin America, Africa or Asia. Even
M-PESA in Kenya has struggled to enter
neighboring markets with the same
gusto. Yet Latin America would benefit
greatly from a viable, scalable solution
if one can push through policy and cost
barriers.
Those who have won on scale have
offered integrated and multi-function,
1. Mastercard Advisors
2. GSMA, Intelligence, 2016

33. LESSONS LEARNED FOR SCALE
33
BROAD SCALE ADOPTION REQUIRES BROAD CUSTOMER FOCUS
Addressing all types of customers – low to high income – drives mass adoption.
M-PESA targeted the masses, regardless of phone or bank, to offer a product
that fits a market gap for all.
BROAD APPLICATIONS DRIVE UPTAKE
M-PESA offered a universal platform; it could receive monthly salary or taxi
fares, and pay for anything – electric bills, cash transfer to relatives, groceries
from any vendor.
AGENT BUY IN AND INCENTIVES ARE KEY
M-PESA’s success can be partly attributed to a broad Safaricom agent network
already in place that was incentivized with commissions to push its adoption
to existing airtime customers.
MONOPOLISTIC COMPANIES CAN DRIVE RAPID ADOPTION
M-PESA was built and connected with the dominant telco in Kenya, Safaricom
– also a brand that garnered far higher consumer trust than any bank in terms
of reach of reliable network and transparency. It’s virtual monopoly in the
market, combined with first mover advantage should be not be overlooked.
CASE STUDY:
MOBILE MONEY SUCCESS
M-PESA launched in 2007, after
extensive R&D funded by a ~£1M
grant from DFID’s Financial
Deepening Challenge Fund, an access
to finance initiative targeting private
sector leaders. It was spearheaded
by Vodafone and its Kenya affiliate
Safaricom, the leading Kenyan telco,
and originally focused on remittances
and money transfer between
individuals.
M-PESA is often lauded as a leading
success story in mobile money, due
to its high market penetration with
over 90% of Kenyans who regularly
use an M-PESA account. It is largely
attributed with converting a highly
unbanked, cash reliant country to
mobile money and a thriving Silicon
Savannah today.

34. or omnichannel solutions and features
that pull the masses toward adoption and
cut overhead or high fees. Smaller niche
players may begin to explore further
partnerships that can adapt to navigate
varying country policies and provide
plug-and-play solutions across markets.
Linio’s partnership with Payoneer is an
excellent example of this.
WHERE’S THE TALENT?
Latin America has been steadily
producing more engineering graduates
over the last few decades, with a
proliferation of universities across the
region. However, international migration
of skilled workers in Latin America
has been high since 2010, at 7.5% on
average compared to 3% in Asia and 5%
in Europe.1
Top talent continues to be
lured away by more attractive salaries to
tech hubs, like SiliconValley; meanwhile
those that choose to stay closer to home
prefer the safety and benefits of local
multinationals. Unlike Silicon Valley,
there are also fewer “feeder companies”
like Google and Apple that train large
quantities of engineers that go on to start
up their own companies later on, and
other initiatives (incubators, etc.) are not
yet producing role models to aspire to.
Inter-American Development Bank’s
Multilateral Investment Fund (MIF) has
launched a new initiative to create 50
million knowledge economy jobs in
Latin America by 2020, yet engineering
and tech programs rank low in global
standards and technology training is only
beginning to enter the radar of earlier
learning. Private organizations like Futura
Schools in Peru are developing first-in-
class curricula to offer kids a high-tech
learning experience, which will ignite
their tech interests and skills-building
early on in life. Laboratoria is training
women to code and has expanded from
Peru to Mexico and Chile but still has
only reached 400 women to date, aiming
to satisfy 10,000 of the high regional
demand by 2020. Online courses
offered by locally grown businesses
like DevCode (Peru) and CódigoFacilito
(Mexico) as well as global giants like EdX
and Coursera, are also delivering courses
to the masses at low cost. Meanwhile,
universities like UTEC – also in Peru – are
dedicated to offering premium quality
technical training for undergraduate
CASE STUDY
LAUNCH: 2010
WHO: Chilean Government, Ministry of Economics
SUCCESSES:
• 1st mover in entrepreneurship for Latin America
that drove regional replication in Peru, Mexico,
and Colombia
• Government funded, modeled after Israel
• Companies must spread entrepreneurship
by earning “social capital points” for hosting
workshops, hackathons, trainings to the
community
• $40k in seed grants to 1,200+ companies from
72 countries to launch business in Chile during
a 6-month program
• $100k grant funds for companies that continue
to operate in Chile- to address high attrition rates
LIMITATIONS:
• 5 years & $40M in grants later, Chile’s economy
has yet to diversify away from commodities
dependence, attract additional investors or keep
companies based locally
• 80% of incubated companies leave after the
6-month program, usually to the US
• 85% of subsequent funding is from abroad
• Chile is still ranked below Colombia, Mexico
and Peru on ease of doing business by World
Banks’ Doing Business Report (2015)
34
1. OECD data, 2013

35. and graduate students, through tailored
curriculum and partnerships with high-
profile universities like MIT and Harvard.
How quickly these programs can develop
and train future talent, then retain it
locally, is yet to be determined. Much
like Telefónica developed Wayra to
incubate new companies, we anticipate
but have yet to see more companies
partnering with technical programs in
universities and schools to offer best-in-
class training and certifications that will
feed their future employment pipeline.
If interesting companies develop and
grow in the region and prices continue
to soar in Silicon Valley, top talent could
return to join these companies and play
leadership roles.
BUSINESS & INFRASTRUCTURE
AS USUAL
Traditional Latin American businesses
have been slow to move, enjoying high
margins and market protection up until
now. Services are costly and often do not
meet customers’ needs, most notably in
the banking sector; however, some banks
are actively blocking innovation that
would benefit their customers. Unless
banks and local traditional businesses
more broadly embrace innovation to
benefit their customers in the longer run,
or act as first movers to support locally
grown new tech-enabled solutions, they
will become obsolete and be increasingly
pushed out by competitors embracing
modern innovations and consumer
demands.
Beyond businesses, infrastructure such as
transportation and mobile connectivity
have improved, but still have a long
way to go. There is still a lack of major,
reliable postal services in the region
that are not exorbitantly expensive
international players, and mobile
connectivity to the last mile is improving
but still not complete, with up to 10% of
Latin Americans still outside of internet
coverage1
and 5% without electricity.2
Connecting far reaching customers and
suppliers to large scale supply chains,
and allowing them access to the online
products that have potential to change
lives through education and healthcare,
or provide entertainment through TV,
music and online shopping purchases,
remains a large untapped opportunity.
– Alex Gómez, Country Manager of Wayra Perú – Telefónica
35
1. GSMA Intelligence, 2016
2. IADB Energy Access Division, 2014
We can call them barriers or we can call them
opportunities. The size of the market is growing
and developing, and we have to be patient….
We don’t have an investment ecosystem
developed. It’s developing.”

36. Latin America is on the verge of something
very big. With the Pacific Alliance promising
the 6th largest trading bloc in the world, to the
economic stability and developed tech space
building in Argentina, the conditions are ripe for
a dramatic change in the tech landscape over the
coming years.”
– Patrick Watson, Director of Latin America at I-DEV International

37. Unlocking Business Potential in Frontier Markets
I-DEV International is a management strategy and investment
advisory firm that specializes in helping to grow and scale
businesses in emerging markets. Over the past decade, I-DEV
has worked with 250+ SMEs and raised over $50M in financing
for growth-stage companies across Latin America, Africa and
Asia.
With global headquarters in San Francisco and regional offices
in Lima and Nairobi, I-DEV links Silicon Valley and the global
tech industry with burgeoning tech hubs across the emerging
markets. I-DEV connects the two through an exchange on
knowledge, trends and opportunities, while also engaging local
and foreign investors. Beyond mobile tech and e-/m-commerce,
I-DEV has advised the clean tech, agriculture, apparel, and
consumer retail sectors on global connectivity, strategy and
investment.
facebook.com/idevinternational/
twitter.com/idevnews
medium.com/I-DEV-insights
CONTACT FOR MORE INFORMATION:
Patrick Watson, Latin America Director
patrick.watson@idevinternational.com
Camille Chouan, Senior Associate
camille.chouan@idevinternational.com

38. e: info@idevinternational.com
w: www.idevinternational.com
SAN FRANCISCO
Global Headquarters
Impact Hub San Francisco
901 Mission St. #105
San Francisco, CA 94130
NAIROBI
Africa Headquarters
Heritage Court, Mbaazi Road
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LIMA
Latin America Headquarters
Av. Prolongación San Martín 207
Barranco, Lima, Peru